The Regal Cycle Company manufactures three types of bicyclesa dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow:

	Total			Dirt Bikes			Mountain Bikes			Racing Bikes
Sales	$	928,000		$	268,000		$	406,000		$	254,000
Variable manufacturing and selling expenses		465,000			116,000			197,000			152,000
Contribution margin		463,000			152,000			209,000			102,000
Fixed expenses:
Advertising, traceable		70,400			9,000			40,800			20,600
Depreciation of special equipment		44,300			20,700			7,700			15,900
Salaries of product-line managers		115,600			40,400			38,700			36,500
Allocated common fixed expenses*		185,600			53,600			81,200			50,800
Total fixed expenses		415,900			123,700			168,400			123,800
Net operating income (loss)	$	47,100		$	28,300		$	40,600		$	(21,800)

*Allocated on the basis of sales dollars.

Management is concerned about the continued losses shown by the racing bikes and wants a recommendation as to whether or not the line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not wear out.

Required:

1. What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes?

2. Should the production and sale of racing bikes be discontinued?

3. Prepare a properly formatted segmented income statement that would be more useful to management in assessing the long-run profitability of the various product lines.